Employee Benefits Live 2010: Design reward to fit people

The essence of total reward is about trying to connect with an organisation’s workforce in order to obtain optimum results.

Employers should design their reward strategy to fit their people, rather than trying to get people to fit the reward design, said Peter Reilly, director HR and consultancy at the Institute for Employment Studies.

Where employers build reward around high performance, they must ensure staff share the organisation’s view of what constitutes high performance, said Reilly. “If you give positive feedback and do not follow this with reward, it may not be enough,” he explained.

Performance-related pay has a tendency to work for a short period of time, producing temporary compliance rather than sustained improvement. In some cases, individual performance-related pay can produce the wrong type of behaviour, such as going against the needs of a team. Employees may also focus on the area that is rewarded and neglect other areas of their job. “There are people and circumstances where the payment of money does not seem appropriate,” said Reilly.

Ensuring employees know how their pay is calculated can also be a key factor in their motivation and engagement. Reilly said: “People who understand how their pay system operates are more likely to be satisfied. It does not mean they have to know how much everyone is paid.”